TO Mr. Henry Zhang, CEO of Zers Development Company

TO: Mr. HenryZhang, CEO of Zers Development Company

FROM: Mr. Jun HaoChen, Sales Department Manager

April 14,2015

SUBJECT:Declining Sales Since 2011

I am writing thismemo to bring to the attention of declining sales. The company hasbeen in operation since the year 2011, and sales have been steadilydeclining over the four year period. This is a worrying factor as theincrease in experience should have contributed to increase in sales.That has not happened. As the new sales manager, I am looking toincrease the sales rate dramatically, and have suggested my ideashere.

Background

The growth of acompany is decided by the sort of revenue increase it shows over aperiod of time. The company started in 2011, and it was expected thatthe sales would increase by at least fifty percent every year. Thiswould help us hire even more qualified employees, and make thecompany the fastest growing real estate company among ourcompetitors. Here, I have included the relevant data provided by thefinancial department.

From the graphbelow, it is easy to observe that the company sales have in fact beendeclining since its inception. In the last four years, the realestate industry has been changing. It has been showing growth ingeneral. That means it is just our company that is not growing. Ifthe real estate economy as a whole is growing, why aren’t wegrowing?

Agraph showing declining sales with respect to years

ContributingFactors

Based on myunderstanding, there are three main factors that are contributing tothe stagnant sales.

  • Low rate of returning customers.

  • Unprofessional employees who sorely lack training.

  • High supplier costs, especially the newest supplier.

ReturningCustomers: The cost of acquiring new customers is always bigger thanthat of retaining existing customers. I have noticed that many of ourexisting customers do not come back for more business. This means, weare constantly spending a lot of money on acquiring new customers. Asthis existing customers leave the company, only a few new customersmake up for the exit. That is why there is a huge decline in sales.

UnprofessionalEmployees: Perhaps one reason why customers do not come back isbecause of the high number of unprofessional employees. I do notblame the employees because they need to be taught on how to beprofessional. If we were to provide training to these employees, theywould be capable of providing services in this sector professionally.This will circle back to the returning customer’s problem and helpus retain those non-returning customers.

High SupplierCosts: The last issue is something that could have been avoidedbefore it ever happened. Our new supplier has been charging much morethan our previous supplier. This is limiting our sales team fromclosing deals for we are unable to offer lower quotes. If we are notable to offer lower quotes, that means we cannot retain existingcustomers who of course expect lower quotes. We cannot do this whenthe supplier is charging us more.

Consequences

The consequenceshere are straight forward. Declining sales means, we are losingcustomers as soon as we are gaining them. Eventually, we will reach apoint where we are no longer in a position to get new customers. Atthat point, we will lose the already existing sales that we haveright now. If we continue in the current line of thinking, thecompany may even have to shut down.

Anotherconsequence that cannot be overlooked is employee morale. Employeesare bound to notice that we are not able to offer them a raise on parwith their peers in other companies. Because of the declining salesthe company cannot inject new blood into the system. We may see amass exodus of top performers which will leave the company in avulnerable position.

Our Next Step

The company hasto work on fixing the main causes that I have identified in the abovenotes. To do this, there will be a high level meeting with all thekey decision makers. Let’s meet up at 10 am. Tuesday, April 20th.If you need more details, I am available.